Lab Grown Meat Stocks

I don't know how long it will take for lab grown meat to be a mainstream consumer product, but I do believe it will happen.

This post is about how I am currently positioning myself for that future, given the lack of public equity options currently available.

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For those who aren't familiar with the topic, lab grown meat is created through a biotech process called cellular agriculture. As an example, rather than raising a cow for 2 years just to slaughter an butcher it, the meat can be made by taking a cell biopsy from the cow, and then having those cells proliferate in a controlled environment. The result is the same protein and meat structure, but much quicker, and without the environmental, ethical, and time costs.

The main problem currently is that this process is still more expensive than farming a cow.

But a lot is happening to change this, and bring more capital in to the space to scale the production and make the process feasible.

• Bill Gates, Richard Branson and Jeff Bezos have all invested in Lab Grown Meat companies
• McKinsey published a research report on the sector, anticipating a $25 billion industry by 2030
• In November, the FDA granted its first safety approval for lab grown chicken
• Just 10 days ago, the FDA granted their second approval for lab grown chicken, further setting the precedent of safety for human consumption
• Lab grown meat has been consumed in Singapore, the only country in the world it is currently regulated for sale, since 2020.
• Traditional meat companies Tyson Foods, Cargill, and Archer Daniels Midland have all made investments in cellular agriculture companies

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The benefits of lab grown meat are clear to me, and I do believe the scaling issue will be solved, enabling significant revenues.

As an investor that doesn't have ties to silicon valley or the Asia Pacific foodtech startup scene, my options are limited to what is currently available on public markets in North America.

Even though there are over 100 private companies that are well know in the cellular agriculture industry, there are, by my count, only 3 publicly traded companies in North America.

Each company has a unique business model. I won't try to adequately explain them all here, but will link the sites so you can DYOR.

1. Agronomics: primary listing is in London, but they do have a US listing (AGNMF) and trade at a $153 million valuation. As a simplified description, they act as a publicly traded cellular agriculture fund, and hold equity in many different companies in the space. Shareholders of Agronomics are benefactors of Agronomics' DD expertise and portfolio appreciation.
2. CULT Food Science: primary listing in Canada (CULT) and also trades in the US (CULTF). Similar to Agronomics, CULT also has a portfolio of private cellular agriculture companies. Where they differentiate, is that they have publicly announced their ambitions to work with these portfolio companies to develop consumer products in a venture studio model, and have acquired product formulations such as Because Animals, a pet food line that is well known in alternative protein circles. The company is currently trading at a $12.5 million valuation.
3. Steakholder Foods: listed on Nasdaq (STKH). Unlike Agronomics and CULT, Steakholder is an operating company fully focused on their own product development. Specifically, they 'specialize in 3D printed meat'. The company is currently trading at a $12 million valuation.

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Agronomics is the clear leader in general market exposure, but as an investor with a higher risk tolerance and experience in wholesale and retail sales, I see the greatest near term upside in CULT Food Science. Brands command value, and it appears they understand this and are working to be first-movers in the space. I love the recent focus on pet food, as I can see this being a great launch point for consumer adoption. People are much more likely to try a new food product on their pet than on themselves, and many vegans and vegetarians would be interested in ensuring their pet gets proper nutrition without needing to slaughter animals to do so.

It needs to be said again that I have already been buying CULT shares, and am therefore biased.

And I am not the only one. In March alone, CULT has traded over 50 million shares, and the stock price is up over 150% since January 1st.

Further, a prominent entrepreneur (Marc Lustig, whom sold his last CPG company for $1.1 billion) has acquired 15% of the company – this is very rare for companies at this low of a valuation. Entrepreneurs of this stature can legitimize early stage companies like CULT, and get them in to meetings and boardrooms that they wouldn't have had a chance at without them.

My thesis is simple:

In the short term (6-18 months) the company should see an appreciation in stock price as more awareness comes to the cellular agriculture space in general, and to CULT's products and brands that begin to have a consumer presence and revenue.

In the long term, CULT and its products and brands become a buyout target for someone like Nabisco, General Mills, or a traditional meat company. Even at $500 million to $1 billion that is a rounding error for them, and in their eyes it would be a wise hedge as this technology continues to improve and take market share away from traditional meat production and consumer products.

Cheers to a more sensible future (and some opportunity along the way)